Welcome to the Xmas edition of SEA Watch with more updates and commentary on what’s happening in the world of shipping and marine insurance.
First on offer is a tragic little story on seafarer abuse at the hands of bankrupt Taiwan owners TMT (Today Makes Tomorrow). TMT’s ships have been arrested in several jurisdictions despite their recent crafty ploy of instructing their US lawyers to file for Chapter 11 protection to provide a second bite of the survival cherry by getting those nasty banks and bunker suppliers off their backs. SEA Watch is invariably out there fighting the owner’s corner but we don’t have too much sympathy for TMT and their top man, Nobu Su. It appears that TMT got themselves into a financial mess due a combination of some serious ‘irrational exuberance’ and what seems to be some very questionable ‘mile high club’ behavior on the part of their bankers. Stupid and even laughable that TMT got away with it but not so funny for their unpaid and reportedly hungry crews.
Next is a follow up piece on October’s article, “The World’s most dangerous cargo”. This time it’s iron ore fines loaded at a remote port in the Philippines which provides further evidence that the problem of IMSBC Code Class A “cargoes which may liquefy” is more prevalent and deadly than previously imagined. The problem is that iron ore fines are not specifically listed in the IMSBC Code and shippers are using this regulatory gap as a way to climb out of their Code obligations. Add in some owners who are desperate for charter revenue in a dismal market and some poorly educated crew and you’ve got yourself a recipe for disaster with crew funerals instead of mince pies for Xmas.
Our third story is this month’s Rubber Ducky award which your editor believes should go to Captain Philips of “Maersk Alabama” fame. Or should we say “infamy” as some of his crew are very unhappy with his decision to sail straight through an area where several pirate attacks had occurred earlier. OK, Captain Philips, his crew and the ship survived and it was a dopey thing to have done. But what’s funny enough to merit a Rubber Ducky award? Well, simply the fact that the unwritten rule of “never let the facts get in the way good story” has been optimised to create a real life hero and a block buster ‘based on a true story’ movie from little more than a media created fairy tale. So what can you say other than “God bless America, CNN and Tom Hanks” and then laugh?
Lastly, your editor is saddened by news of the recent death of Mr Paul Thomas, MD of Thomas Holdings, Manila. In addition to all of his other business interests, Paul worked together with his loyal team and ourselves as SEAsia Philippines. SEA Watch has therefore included a tribute to Paul and his life along with condolences to his family. As a family requested alternative to flowers, SEAsia made a donation to Paul’s favourite charity, the Red Cross and its Philippine Typhoon Relief Fund. SEA Watch hopes that others of you out there who knew Paul might like to show your respect s and do the same thing.
Finally, well it’s almost Xmas again which doesn’t really seem possible unless 2013 has been running in Star Trek ‘warp drive’? Anyway, all of us at SEA Watch and SEAsia hope that all of our readers and your families will enjoy a happy holiday season and New Year. We will be back with more maritime industry news and commentary for you in 2014. Take care and read on.
We would like to hear from you as well. Is there a marine industry issue out there that’s puzzling or annoying you? Tell us about it by sending a note to firstname.lastname@example.org
Connect the dots:
Crew abuse, a bankrupt owner and ‘party time’ Taiwanese bankers
Taiwan based shipping company TMT (“Today Makes Tomorrow”) is under the gun at several ports around the world with its vessels arrested by creditor banks and building yards. One of the nastier stories to emerge is that the crew of the wood chip carrier “Donald Duckling” (TMT’s flamboyant owner, Nobu Su, has a penchant for naming his ships after animals), has run out of food and spare parts.
The Panamanian flag vessel was detained last week by PSC inspectors at Tyne port in the UK after discovering a large number of serious deficiencies, including breaches of the Maritime Labour Convention (MLC). Also attending were the UK’s seaman’s union Nautilus and the ITF’s inspector Tommy Molloy who described the vessel as “one of the worst examples of substandard shipping that he has ever encountered”.
Examples included the crew being forced to fish from the vessel because there was no food left on board and then having to cook their catch on the open deck as the galley stove no longer worked. Another report was that the vessel’s last Chief Engineer had been fired for having the audacity to order spare parts. And all this on a ship that spent 121 days earlier this year under PSC detention for 21 deficiencies at the Port of Gibraltar with another 33 being discovered at Las Palmas in September.
Bottom line is that TMT has simply run out of money due to global overcapacity and apparent ineptitude at management level. So how did TMT get itself into this mess?
According to TradeWinds reports, the federal bankruptcy court in Houston, Texas, has lately become a focus for Taiwan’s ship finance industry, as bankers try to control their huge exposure to Su’s beleaguered TMT.
“That’s affecting ship finance in Taiwan generally because it’s scared the hell out of the banks. Before TMT, they never knew shipping loans could go bad,” said one Taipei owner who spoke on condition their name would not be used, and who suggested that “reckless” lending was to blame. “I cannot believe that any bank that had done its normal due diligence would have granted a loan to a company whose finances were stretched so thin,” the critical owner said.
Ship owners in Taiwan find it suspicious that in the island’s banking environment, where personal trust and connections going back a generation count for a lot, a lone wolf like the seldom-seen Nobu Su could have pulled off his fatal final round of borrowings. Some speculate darkly about junior banking executives being too easily impressed by trips to South Korean shipyard festivities on the TMT owner’s private Boeing 737. “Those things aren’t built for just travelling,” said an owner.
So what about Nobu Su? His website alleges that TMT is the victim of “casino capitalism” caused primarily by the iron ore market turning from a real price into a paper based derivative which imposed a 3-trillion-dollar tax on the world and dragged TMT down with it. Crazy? Well check it out for yourself dear reader here and tell us what you think.
Taiwan is of course not the only country where ship finance ‘monkey business’ took place in the boom years as there is evidence of such gravity defying activities in China (COSCO), Korea (STX) and Vietnam (Vinalines) as well. However, the ‘chickens have now come home to roost’ and it would be nice to think that the Asian banks have learned some ‘not to be repeated’, hard lessons. Regrettably, the evidence provided by repetitive shipping cycles going back 300 years says otherwise. So hang on for the next round of ship owner and banking insanity which (according to “Big John”) is just around the corner.
Iron ore fines: world’s 2nd deadliest cargo?
The October edition of SEA Watch contained your editor’s views on nickel ore as the world’s deadliest cargo based on body count to date. In this edition, we look at another IMSBC Code Group A “cargo which may liquefy”: iron ore fines. This is a bulk mineral cargo that dropped off the IMO’s radar until the loss of two ships and many lives in 2009. Both vessels were carrying iron ore fines loaded in India. Investigation by India’s DGS showed that both cargoes had been wrongly declared as IMSBC Code Group C cargo when instead they should have been treated as Group A. The consequences were fatal and the underlying causes appear to have been greed and corruption together with a large measure of ignorance.
Several weeks ago, SEAsia was instructed to attend at a remote port in the Philippines to conduct what at first appeared to be a standard protective iron ore fines sampling exercise for a well-known non-IG Club. As it transpired, the attendance turned into one of the least standard sampling exercises SEAsia has ever been involved in such that we shall not be mentioning any names.
The alarm went off at the Club when the Master e-mailed his own photos of the water logged stockpiles of the cargo scheduled to be loaded on board which had been declared by the shipper as Group C cargo. The shipper had also provided a certificate from a Singapore ore analysis lab showing a moisture content of what appeared to be (on the basis of the photos) an improbable 5.7%. Further, there were no details of the FMP (Flow Moisture Point) or the Transportable Moisture Limit (TML).
With respect to the shipment of Group C cargoes, the IMSBC Code does not require the shipper to produce evidence of the FMP and TML (which is 90% of the FMP). This is because this additional and more time consuming and expensive critical data requirement only applies to Group A “cargoes which may liquefy”. Not surprisingly, shippers will do all possible to avoid declaring their cargo as Group A and the associated expense along with potential cargo rejection.
The major problem with the Code is that iron ore is listed as a Group C cargo and despite the 2011 amendments, it still does not provide a specific listing for iron ore fines. Iron ore lumps are generally accepted as consisting of ore particles of between 6.3 mm up to 31.5 mm and beyond, However, iron fines are normally accepted as consisting either entirely or substantially of iron ore particles which are under 6.3 mm in size. This serious gap in the Code provides a regulatory ‘escape hatch’ for shippers who either intentionally or due to ignorance (and possibly both), believe this categorization omission allows them to declare iron ore fines as a Group C cargo.
So are shippers allowed to escape and endanger ships and their crews? Must the Master and ship owner accept the shipper’s Group C declaration as being the truth? Fortunately, the answer is a firm “NO”, on both counts. The IMSBC Code provides that if there are any doubts as to the correct classification of the cargo based on site observations and can tests, then the cargo shall be treated as if it is a Group A cargo. Further, SOLAS Chapter VI Part B, Regulation 6.2, states: “Concentrates or other cargoes which may liquefy shall only be accepted for loading when the actual moisture content of the cargo is less than its TML.”
In the aforementioned circumstances, our Master was legally entitled under the terms the ISMBC Code and the ISM Code (which are both given the force of law under SOLAS and national legislation) to refuse to load. Regrettably, he did not do so – despite our surveyor’s can test demonstration that the cargo was unfit for carriage by sea - and the vessel was loaded in circumstances where SEAsia was not permitted by shippers to take samples for analysis until after completion.
Analysis is not easy in developing countries including the Philippines and Indonesia where there are few labs who have the equipment and skills necessary to provide a reliable result to IMSBC Code standards. Results then take 4-5 days and time is the enemy when the shipper is howling about delays and owners are hard pressed to obtain any charter at all to pay their bank loans. The samples drawn and delivered to Manila by SEAsia are undergoing processing as SEA Watch goes to press. However, the results - based on our surveyor’s photos and can tests - are a foregone conclusion.
As for the ship and her crew? Well, if your editor was serving on board he would be wearing his orange survival suit with an attached EPIRB.
Rubber Ducky Award:
was Captain Philips a hero or a fool??
As most of us will know, the infamous Somali pirate attack on the “Maersk Alabama” on 8 April 2009 has now been released as block buster movie starring Tom Hanks in the title role. But was Captain Philips a hero? Or was he grossly negligent in ignoring warnings to stay 600 n miles off the Somali coast and avoid an area where several piracy attacks had already recently occurred?
The American crew of the “Maersk Alabama”, no doubt spurred on by their US lawyers (working for a contingency fee of up to 40% of the claim), have expressed the view that Captain Philips was negligent and have filed proceedings against his employers, Maersk Lines, for damages for injury both physical and mental.
So what are the facts? Multiple e-mail warnings addressed to “the Master – MV Maersk Alabama”, were sent to the vessel by a private security company and the UK Maritime Trade Organisation advising to stay 600 n miles offshore. However, they were evidently not seen by any of the other officers or crew prior to the attack. Later, after Captain Philips had been taken hostage by 4 of the pirates who then escaped in a ship’s lifeboat, the e-mail warnings were found and the positions of previous attacks - which had occurred about 350 n miles off the coast - were plotted on the chart. It could then be seen that the “Maersk Alabama’s” course track, which had been ordered by Philips, passed straight through the previously advised hijacking area. Needless to say, the crew were not overly impressed.
Captain Philips had been in command in the area for about 18 months. So he knew the risk and the security requirements. He also knew that taking the vessel further off the coast would impact negatively on the vessel’s port schedule and would add to the already high cost of fuel. So it seems to your editor that Captain Philips took a very high risk and unwarranted chance, especially when he had no armed security team on board.
Was the risk taken by Captain Philips a reasonable risk considering the clear warnings, the lack of ship board defences, the danger to the crew and the potentially immense cost of releasing the vessel if she was captured? Your editor thinks not and must wonder why any well trained Master Mariner with 30 years of sea going experience, as Captain Philips had, would think and act otherwise.
Was Captain Philips influenced by commercial pressure from his owners/employers? Was there an element of American ‘John Wayne’ bravado in what he did? Or was he just careless and unthinking of the consequences when he ignored the e-mail warnings? We will probably never know. However, your editor believes the current evidence supports the presentation of the Rubber Ducky Award to Captain Philips for his apparently aberrant display of dangerous and potentially deadly seamanship. What say you dear readers? Your editor’s bet is that Maersk will quietly settle the claims and their P&I Club will pick up the bill.
Tribute to Paul Thomas:
President of Thomas Holdings/SEAsia Philippines
After a long illness, Paul Christopher Thomas passed away in Manila last week at the age of 53. As a mark of respect to Paul, we are not including a SEAsia Network Partner feature this month and what follows is a SEA Watch tribute to Paul and his work.
Paul, who was born in the UK, began his sea going career in 1970 as a marine engineer cadet with the Blue Funnel Line, one of the UK’s premier cargo liner companies. He moved on to serve with other high profile shipping companies while at the same time studying and ultimately becoming qualified as a Class 1 Chief Engineer. Later, Paul obtained an MSc degree in Engineering and Management and, amongst achieving other awards and qualifications, was appointed as a Fellow of the Royal Institute of Naval Architects and a Fellow of the Institute of Marine Engineers.
Paul moved to the UAE in 1982 to take up an appointment as the Port Engineer and Deputy General Manager at Ras Alkaimah for the Port Authority Management Company owned by Grey Mackenzie. In that role, Paul was responsible for all of the ports tugs, shore equipment, buildings, roads and piers. Later, in 1987, Paul was engaged by the Tanzania Harbour Authority as Senior Marine Engineer. His role there was to help build and manage a new British aid assisted dockyard at Dar Es Salaam, including its operation, on going development and the training of its staff.
Paul’s next move was to Manila in the Philippines in 1990. He there established a branch of the well-known UAE based marine consultancy and surveying company, Henderson. Operating under the name Henderson Marine Services Inc, Paul’s work also included ship management, crewing and ship repair. Later, in 1997, Paul re-structured his company as Thomas Holdings Group so as to encompass all of his business interests which by now extended to P&I inspection and correspondent work as well as representation for a number of open ship registers such as St Kitts and Nevis.
It was some years after 1997 that the SEAsia Network met up with the well-known ‘Willie’ Henderson (now unfortunately deceased) and his own network of global representatives at a marine surveyor’s conference in Hong Kong. Although working in a similar market, SEAsia and Hendersons were not direct competitors and the two groups quickly identified mutual interests and the potential for mutual support which continues to this day. In fact, the two groups (which of course included Paul Thomas who along with other Henderson’s offices agreed to sign on as SEAsia Network members) became firm friends sharing ‘surveyor horror stories’ at both the conference venue bar and at joint dinners on several occasions.
Paul’s interests were indeed many and varied but his last efforts were very much focused on passing on his knowledge and experience to both his own team in Manila as well as to other Philippine marine professionals. To accomplish this, he formed his own maritime academy and created and ran a number of courses and seminars for the Philippine community. Instructors included Mr Mike Wall, former MD of Kiwi Marine, HK, and author of several books including a best seller, “Marine Survey Report Writing”. We are hopeful that there will be more such courses to come as an integral part of Paul’s legacy.
SEA Watch and the SEAsia Network would like to express their sincere condolences to Paul’s wife, Lorna and his daughter, Cathy. We understand that these stalwart ladies are firmly at the helm and, along with May Valles and the rest of their loyal team, they will be taking Thomas Holdings Group and SEAsia Philippines forward.
The world has lost a good man and a great marine surveyor. Rest in peace Paul.